Taxes for Americans employed by American companies

[NorthernRyland]

I'd like to start a topic about Americans who are living in Thailand while employed by American companies and paying income tax as employees or contractors.

 

Some basic numbers which please anyone correct. For people earning the median salary (like 60-70k USD) I believe you're going to be in the top tax bracket in Thailand at 35% but paying somewhere around 30% income tax (state and federal) in the US. Is it likely they're going to apply the difference in the tax rates for money imported? This is the key information I want to know, what really is our tax rate going to be set at? The way I see it Thailand is about to get x% more expensive for everything so I'd like to know what that percent is.

 

The more concerning thing is how we're expected to show our employment details to the tax authorities and then immigration because they're going to request this information before issuing visas most certainly. I watched a video on YT today where the Thai Embassy in Switzerland said this is going to be the procedure. This basically means we're admitting to working while in Thailand, which is something you could kind of hide or they would ignore in the past but now it's right in the open. Has anyone thought about this and what they're going to do?

 

In fact I got quested when I did my first marriage extension just last year and the IO warned me to not work outside my house and made a little fuss about it. I did disclose I was employed when I did my extension (they asked for the company name and income amount so I told them). None of this makes sense of course because where did I get the 400k from and why did they ask anyways if it's illegal to work? The IO let it go but now they're taking this issue to the next level now for everyone to know.

 

Sorry a rant I want to get off my chest. It's really outrageous to me that I'm going to be taxed based on my income as if I'm rich even though I only spend about 30k baht in the country per month. This money is a premium for the economy and pure liquidity. Compare that to money earned in the country which has changed hands between Thai and not new money like ours is. That should have been enough for them. If what I think is going to happen does I'm going to be paying more tax than my wife but receive zero rights or benefits. It's just a crass money grab because they know they can get away it. 

[FarangRimPing]

I'm now retired but worked for many years in Thailand.

 

I paid 37% (or 35%) marginal tax here in Thailand.

 

When my US tax return was prepared on Thailand income, I received a tax credit for what I paid in Thailand. Since the Thailand tax rate was higher than the US tax rate, I had to pay a negative tax to the US, but of course, the US would not refund this amount. Instead, I had a tax credit which I could use in future years, but this had to be applied to foreign income, not US income.

 

So for example, I paid $37,000 in taxes to Thailand. In the US, I should pay $20,000 on that income, so I got a credit of $17,000 which I could apply to non-US income at some time in the future. (I think the credits expired in 7 years but I'm not sure.)

[FritsSikkink]

What are you complaining about, you are working illegally in Thailand as you don't have a work permit and you are nowhere near the 35%

 

 Thailand Personal Income Tax Rates - SHERRINGS       

Thailand Personal Tax Deductions and Allowances - SHERRINGS

[NorthernRyland]

16 minutes ago, FritsSikkink said:

What are you complaining about, you are working illegally in Thailand as you don't have a work permit and you are nowhere near the 35%

 

 Thailand Personal Income Tax Rates - SHERRINGS       

Thailand Personal Tax Deductions and Allowances - SHERRINGS

 

Then why are they asking us to expose our income if we're living in Thailand more than 180 days per year? Shouldn't they be saying if you're living in Thailand more than 180 days and HAVE a foreign income stream then you're working illegally and should have your visa revoked? It seems like they know people are earning abroad and living here and they want our money now.

[NorthernRyland]

1 hour ago, FarangRimPing said:

When my US tax return was prepared on Thailand income, I received a tax credit for what I paid in Thailand. Since the Thailand tax rate was higher than the US tax rate, I had to pay a negative tax to the US, but of course, the US would not refund this amount. Instead, I had a tax credit which I could use in future years, but this had to be applied to foreign income, not US income.

 

So for example, I paid $37,000 in taxes to Thailand. In the US, I should pay $20,000 on that income, so I got a credit of $17,000 which I could apply to non-US income at some time in the future. (I think the credits expired in 7 years but I'm not sure.)

The exact opposite problem I'm having. 🙂

[Mike Lister]

Poster @JimGant is current on US tax related knowledge, I'm sure he will be along soon to comment.

[NorthernRyland]

44 minutes ago, FritsSikkink said:

Thailand Personal Income Tax Rates - SHERRINGS       

Thailand Personal Tax Deductions and Allowances - SHERRINGS

Sorry I missed this before. So it's a graduated tax rate like the US. Hmm median salary in the US appears to put you in a similar nominal tax rate, near 30%. That may not be on accident.

 

My wife earns ~50k/month (which above middle class for Chiang Mai?) and pays less than 10% tax. I could be paying a 3x higher rate than her despite spending less money in the country. But I'm working in Thailand illegally so I will probably be deported once I file my first tax receipt which immigration will require. 😂

[TheAppletons]

1 hour ago, NorthernRyland said:

But I'm working in Thailand illegally so I will probably be deported once I file my first tax receipt which immigration will require. 😂

 

  Doubtful, despite what your YouTube source of misinformation claims.

  

[anrcaccount]

13 hours ago, NorthernRyland said:

 

 

The more concerning thing is how we're expected to show our employment details to the tax authorities and then immigration because they're going to request this information before issuing visas most certainly. I watched a video on YT today where the Thai Embassy in Switzerland said this is going to be the procedure. 

. 

The video gives absolutely no evidence that this will be the case.

 

K Nathanan at 29:30 discusses the existing practice relating to only a small number of visa categories, those that have a work permit attached, where you currently need to provide evidence of tax paid as part of the extension process. He specifically mentions eligibility for a work permit. 

 

He then goes onto an different discussion on LTR visas, and doesn't address Non O Visas or Elite Visas. 

 

There is no evidence that any type of tax return will be required, for most visa categories. 

[Mike Lister]

14 hours ago, NorthernRyland said:

I'd like to start a topic about Americans who are living in Thailand while employed by American companies and paying income tax as employees or contractors.

 

Some basic numbers which please anyone correct. For people earning the median salary (like 60-70k USD) I believe you're going to be in the top tax bracket in Thailand at 35% but paying somewhere around 30% income tax (state and federal) in the US. Is it likely they're going to apply the difference in the tax rates for money imported? This is the key information I want to know, what really is our tax rate going to be set at? The way I see it Thailand is about to get x% more expensive for everything so I'd like to know what that percent is.

 

The more concerning thing is how we're expected to show our employment details to the tax authorities and then immigration because they're going to request this information before issuing visas most certainly. I watched a video on YT today where the Thai Embassy in Switzerland said this is going to be the procedure. This basically means we're admitting to working while in Thailand, which is something you could kind of hide or they would ignore in the past but now it's right in the open. Has anyone thought about this and what they're going to do?

 

In fact I got quested when I did my first marriage extension just last year and the IO warned me to not work outside my house and made a little fuss about it. I did disclose I was employed when I did my extension (they asked for the company name and income amount so I told them). None of this makes sense of course because where did I get the 400k from and why did they ask anyways if it's illegal to work? The IO let it go but now they're taking this issue to the next level now for everyone to know.

 

Sorry a rant I want to get off my chest. It's really outrageous to me that I'm going to be taxed based on my income as if I'm rich even though I only spend about 30k baht in the country per month. This money is a premium for the economy and pure liquidity. Compare that to money earned in the country which has changed hands between Thai and not new money like ours is. That should have been enough for them. If what I think is going to happen does I'm going to be paying more tax than my wife but receive zero rights or benefits. It's just a crass money grab because they know they can get away it. 

Sorry, a rant I want to get off my chest!

 

After all the threads that have been posted on AN on this subject and the hundreds of mentions made of the simple tax guide, it sounds as though you still haven't bothered to read any of them and prefer to get your dis/misinformation from Youtube videos! There is no link between Immigration and the new tax law, at present. Once again, here's the simple tax guide link, strongly suggest you read it before posting further on this subject!

 

I'm tempted to close this thread but will leave it open for a short time. If after you've read the guide you can post any remaining questions that arise, after which it will be closed.

 

 

 

[biervoormij]

2 hours ago, NorthernRyland said:

Sorry I missed this before. So it's a graduated tax rate like the US. Hmm median salary in the US appears to put you in a similar nominal tax rate, near 30%. That may not be on accident.

 

My wife earns ~50k/month (which above middle class for Chiang Mai?) and pays less than 10% tax. I could be paying a 3x higher rate than her despite spending less money in the country. But I'm working in Thailand illegally so I will probably be deported once I file my first tax receipt which immigration will require. 😂

I believe that the new tax only applies to funds you bring into the country. If you are spending less than your wife just bring what you require to live and leave the rest in the US. My understanding is if you bring in 50K a month you will pay the same tax as your wife.

 

I also believe that any tax paid in Thailand can be used on your US tax return as a Foreign tax credit. I think if you leave some of your earning in the US and use the Foreign tax credit you may not see any increase in your taxes but this is only my guess. I would read about the Foreign tax credit in the US if I were you. My income is below the standard deduction in the US so does not help me.

 

I am not clear with this new tax how I prove the money I bring into the country is saving earned prior to moving to Thailand. I hope that in time it will be made clearer and plan to bring in less than 120K the threshold for filing taxes in 2024.

 

 

[Sheryl]

2 hours ago, NorthernRyland said:

I'm working in Thailand illegally so I will probably be deported once I file my first tax receipt which immigration will require. 😂

 

Immigration does not require tax receipts for extensions of stay based on  retirement or marriage. I believe it does for business visas.

 

It is actually not illegal to work while here on extension of stay for marriage, but you must hold  a work permit, and practically speaking there is no way to get one if your employer is not based in Thailand. Do I understand correctly that you are working remotely for a US-based company?

 

Revenue Dept is not interested in your total income, just the amount remitted to Thailand. That amount is taxable.

 

Savings from earnings prior to 2024 on the other hand are not. If you have any savings that would qualify, remitting only these and banking your earnings in the US might be an option.

 

You can apply any tax paid in Thailand to your US tax obligation and vise versa. But of course if you are claiming the foreign income exemption, your US taxes may be minimal or none.

 

 

[JimGant]

4 hours ago, FarangRimPing said:

Instead, I had a tax credit which I could use in future years, but this had to be applied to foreign income, not US income.

 

Just to put US retirees at ease, if the DTA says Thailand has first/exclusive taxation rights on US income remitted to Thailand, then you have an "out" to the Tax Code, where it says credits are only against taxes paid on Thai income. Nope. If that remitted income is subject to the DTA, for the purposes of eliminating double taxation, then that US income taxed by Thailand will be treated as if it were Thai, not US, income. Thus, any credits banked (under Form 1116) are applicable to future US remitted income, since such remittances are treated the same as Thai income. Form 8833 applies, which points out how the DTA trumps the US Tax Code.

[JimGant]

12 minutes ago, Sheryl said:

Do I understand correctly that you are working remotely for a US-based company?

 

Thanks, Sheryl, for that question. Its answer will, hopefully, stop my head scratching as to the OP's real question....

[Mike Lister]

24 minutes ago, Sheryl said:

 

Immigration does not require tax receipts for extensions of stay based on  retirement or marriage. I believe it does for business visas.

 

It is actually not illegal to work while here on extension of stay for marriage, but you must hold  a work permit, and practically speaking there is no way to get one if your employer is not based in Thailand. Do I understand correctly that you are working remotely for a US-based company?

 

Revenue Dept is not interested in your total income, just the amount remitted to Thailand. That amount is taxable.

 

Savings from earnings prior to 2024 on the other hand are not. If you have any savings that would qualify, remitting only these and banking your earnings in the US might be an option.

 

You can apply any tax paid in Thailand to your US tax obligation and vise versa. But of course if you are claiming the foreign income exemption, your US taxes may be minimal or none.

 

 

 

8 minutes ago, JimGant said:

 

Thanks, Sheryl, for that question. Its answer will, hopefully, stop my head scratching as to the OP's real question....

The OP is working for an American company but lives here on an extention based on marriage to a Thai.

 

"I got quested when I did my first marriage extension just last year and the IO warned me to not work outside my house and made a little fuss about it. I did disclose I was employed when I did my extension (they asked for the company name and income amount so I told them)"

 

and,

 

"This basically means we're admitting to working while in Thailand, which is something you could kind of hide or they would ignore in the past but now it's right in the open. Has anyone thought about this and what they're going to do?"

 

The OP is working illegally or he is here on the wrong visa, even though he is married to a Thai.

 

 

 

 

[Sheryl]

10 minutes ago, Mike Lister said:

 

The OP is working for an American company but lives here on an extention based on marriage to a Thai.

 

"I got quested when I did my first marriage extension just last year and the IO warned me to not work outside my house and made a little fuss about it. I did disclose I was employed when I did my extension (they asked for the company name and income amount so I told them)"

 

and,

 

"This basically means we're admitting to working while in Thailand, which is something you could kind of hide or they would ignore in the past but now it's right in the open. Has anyone thought about this and what they're going to do?"

 

The OP is working illegally or he is here on the wrong visa, even though he is married to a Thai.

 

 

 

 

It us not 100% clear to me from this that his employer is physically based in Thailand. If it is, surely he could (and should)   get a work permit?

[Mike Lister]

Just now, Sheryl said:

It us not 100% clear to me from this that his employer is physically based in Thailand. If it is, surely he could (and should)   get a work permit?

The employer doesn't have to be based here, the question is where the work is performed.  

 

Para 28 of the Simple Guide:

 

As a general principle, any payment you receive for work that arises within Thailand is regarded as assessable income. You should note that if you are generating income by working while staying in Thailand, it is (and has always been) irrelevant where that money is paid and whether you bring the money into the country or keep it offshore. That money arises in Thailand hence it is taxable here.

[Sheryl]

13 minutes ago, Mike Lister said:

The employer doesn't have to be based here, the question is where the work is performed.  

 

Para 28 of the Simple Guide:

 

As a general principle, any payment you receive for work that arises within Thailand is regarded as assessable income. You should note that if you are generating income by working while staying in Thailand, it is (and has always been) irrelevant where that money is paid and whether you bring the money into the country or keep it offshore. That money arises in Thailand hence it is taxable here.

I was not referring the tax implication but rather the "illegal employment" issue. 

 

He can legally work on a marriage extension with a work permit. So trying to figure out why he is instead working without one.  

[NorthernRyland]

5 hours ago, biervoormij said:

I believe that the new tax only applies to funds you bring into the country. If you are spending less than your wife just bring what you require to live and leave the rest in the US. My understanding is if you bring in 50K a month you will pay the same tax as your wife.

 

This is the reason I wanted this topic because despite Mike's helpful document people are having a hard time understand this, myself included.

 

True or false: your tax rate is determined by your income so if you're earning enough to be in the 35% bracket it doesn't matter if you import 100k per month or 10k per month, your rate on that money will be 35%. I understand there are myriad deductions but those on are your income, not the amount imported. Can anyone confirm this?

[NorthernRyland]

4 hours ago, Mike Lister said:

The employer doesn't have to be based here, the question is where the work is performed.  

 

Para 28 of the Simple Guide:

 

As a general principle, any payment you receive for work that arises within Thailand is regarded as assessable income. You should note that if you are generating income by working while staying in Thailand, it is (and has always been) irrelevant where that money is paid and whether you bring the money into the country or keep it offshore. That money arises in Thailand hence it is taxable here.

 

I'm sorry if I wasn't clear, this topic was meant for companies that are in America and have literally  no connection whatsoever to Thailand.

 

I don't understand how this doesn't intersect with immigration. So they're expecting people without work permits to file taxes on money earned while living Thailand? If they want us to pay taxes they really should make this clear. I don't expect they will of course and we'll just keep doing what we do until we get pulled aside and questioned.

[NorthernRyland]

4 hours ago, Sheryl said:

I was not referring the tax implication but rather the "illegal employment" issue. 

 

He can legally work on a marriage extension with a work permit. So trying to figure out why he is instead working without one.  

 

Is it illegal to live in Thailand more than 180 days a year while employed by a US company?

 

Not sure what you mean, getting a work permit is not possible if you're already employed by another company. Thailand obviously knows people are doing this but they've turned a blind eye because there's no victims. I'm sure the new tax rules are aimed at people like us because there's money on the table and they know it.

[NorthernRyland]

4 hours ago, Mike Lister said:

The OP is working illegally or he is here on the wrong visa, even though he is married to a Thai.

 

When I got the *12* month extension they literally asked me about my employer and my income. It's illegal based on old laws that no longer make any sense and everyone knows it apparently. Instead of kicking us out taxing us makes more sense I would think.

[Sheryl]

24 minutes ago, NorthernRyland said:

 

Is it illegal to live in Thailand more than 180 days a year while employed by a US company?

 

Not sure what you mean, getting a work permit is not possible if you're already employed by another company. Thailand obviously knows people are doing this but they've turned a blind eye because there's no victims. I'm sure the new tax rules are aimed at people like us because there's money on the table and they know it.

 

I do not understand what you mean by "getting a work permit is not possible if you're already employed by another company". The company you are employed by, should help you get a work permit.

 

It appears from a few posts up, that your company is not based in Thailand. This would explain why they cannot get you a work permit. In other words, you are working remotely for a company based in the US.

 

Technically illegal but pretty much unenforced. I would however certainly not advertise the fact or tell it to immigration.

 

And yes, any income you bring into Thailand is tax assessable in Thailand.

[JimGant]

Am I the only one confused here?

[Sheryl]

29 minutes ago, NorthernRyland said:

 

I don't understand how this doesn't intersect with immigration. So they're expecting people without work permits to file taxes on money earned while living Thailand? If they want us to pay taxes they really should make this clear. I don't expect they will of course and we'll just keep doing what we do until we get pulled aside and questioned.

Immigration (which issues visas and extensions of stay), Labor Department (which issues work permits) and Revenue Department are all entirely separate government departments and have nothing to do with each other.

 

It  is not unique to Thailand that entirely separate  government departments  do not particularly communicate or coordinate  and that rules of one often conflict with rules of another.

[Sheryl]

2 minutes ago, JimGant said:

Am I the only one confused here?

Actually it has finally become clear.

 

He performs work remotely for a company based in the US. So cannot get a work permit. Technically illegal but common enough in the modern age and usually overlooked.

 

He owes Thailand taxes on that income and he seems to understand this but is concerned that he would be filing a tax return on income that resulted from working illegally (i.e. without a work permit, but for a company based in the US).

 

He expects different Thai governmental departments to coordinate together on matters that impact on expats,  which of course they do not.

 

The solution to his problem is a bit less clear. His options to me seem to be:

 

- file and pay taxes in Thailand on the (probably safe) assumption that the fact that he filed will not come to the attention of the Labor Dept (who likely could care less about remote work for a US based company anyhow).

 

- not file and, if asked, claim the remittances were from savings. Risking serious penalties if found out to be untrue.

 

#1 IMO is the safer course of action but also the costliest, at least in the short term (#2 could get very costly if he is caught). 

 

He is likely taking the foreign income exemption on his US taxes so tax credit from payments in Thailand will not do much if anything for him financially.

 

[Mike Lister]

10 minutes ago, JimGant said:

Am I the only one confused here?

I'm hoping Sheryl understands it and gets it sorted, she's pretty good at doing that. 🙂

[Sheryl]

50 minutes ago, NorthernRyland said:

True or false: your tax rate is determined by your income so if you're earning enough to be in the 35% bracket it doesn't matter if you import 100k per month or 10k per month, your rate on that money will be 35%. I understand there are myriad deductions but those on are your income, not the amount imported. Can anyone confirm this?

 False for most expats. But true for those whose income is derived from work performed in Thailand.

[Sheryl]

37 minutes ago, NorthernRyland said:

When I got the *12* month extension they literally asked me about my employer and my income. It's illegal based on old laws that no longer make any sense and everyone knows it apparently. Instead of kicking us out taxing us makes more sense I would think.

Are you using the income method or the 400k in the bank method? If the latter should not need to tell them anything about your work.

[Mike Lister]

Isn't TR the classic digital nomad, other than he's married to a Thai? 

 

I'm presuming TR gets paid in the US, is taxed there and then imports his earnings, is that correct?

 

Those things being true, perhaps opening a Thai company to receive the US earnings would work, that way he could retain his marriage visa and use the company and the US/Thai DTA to reclaim US tax with held?.

 

@NorthernRyland